long term investment portfolio

[shasta]

Growth and RISK .....original post didnt imply risk was to be a desired criteria.

Yes, you are quite right, there is risk associated with these countries, but there growth prospects appear better than the US, Asia & EU in the short/mid term

[voltage]

However you can access global companies that invest in emerging countries, most of these are in USA like YUMS, McDonalds, Coke. Interesting I used google finance and compared share growth comparisons over 10 years. A company like Coke outperformed any NZ company.

[BIRMANBOY]

ok but dont forget the exchange rate...Its good at the moment to buy US stocks but whats it going to be like when you (they) want to cash them in??? Any growth could conceivably wiped out by adverse currency movements. It just adds an another unknown factor into the equation.

However you can access global companies that invest in emerging countriesmost of these are in USA like YUMS, McDonalds, Coke. Interesting I used google finance and compared share growth comparisons over 10 years. A company like Coke outperformed any NZ company.

[ENP]

However you can access global companies that invest in emerging countries, most of these are in USA like YUMS, McDonalds, Coke. Interesting I used google finance and compared share growth comparisons over 10 years. A company like Coke outperformed any NZ company.

Err yea but the exchange rate 10 years ago was around 40 cents but now it's up around 80 cents...

The original poster still hasn't told us what he wants out of his investments. So how can anyone suggest anything? You are better off learning more about what you want, what your style of investment is, how long your time frame is, what risk you are willing to take (can you sleep at night) and what your investment criteria is.

For example, if I was to invest today mine would be a 15% return, value invest in large cap stocks in NZ or AUS, time frame 10+ years, not too much risk, so therefore stick to excellent companies and buy with a margin of safety. Investment criteria is high gross/net returns compared to competitors, high return on equity, paying dividends, increasing EPS each year and a stock I believe to be 20% under my estimated value.

Therefore, if this is my criteria, it filters out 95% of stocks.

You have told us nothing at all even close to this. So how do you expect to get reasonable advice if we don't know the first thing about you?

[voltage]

Thanks ENP for refocusing the discussion. Mt situation is I wish to live off my shares in 5 years time. This will be a combination of dividend and selling capital. I am 57 and goal is to have a million in shares. I am two thirds the way there. Exchange rate has not been kind. I split shares approx 3 ways nzx ( AIA, fbu, kfl, LPTs, SKC, CEN, RYM, FRE) , asx ( the banks, RIO, BHP, AGL, CPU, QBE) and global ( 5 ITs, BP, APPLE, Google, QQQ). I prefer to accumulate and hold for ever but do get influenced by brokers of what is hot and sell, eg sold Delegats recently because of wine glut and rising dollar.
Have had some risky small companies but often come to grief with these. I will borrow to buy shares. My portfolio would be a lot higher but overseas component has been hammered by continual rising dollar over the last 10 years. UK from 27 to 52 now. one would think this is the time to load up on overseas shares since the dollar is so high. i believe the market is usually efficient and do not have the knowledge to analyse balance sheets. Brokers have professionals to do this. Am I missing something, on the right track or am i making this too complicated.

[OldRider]

Voltage:
Your plan is about the same as ours, except we are now well into living off our investments.
For us it has worked. We do keep bonds and term deposits now though, to have sufficient regular income from these, together with
the pension to pay for all day to day living expenses. Extras - new cars, Holidays etc come from investment income, so far capital
has been maintained, and I think you expectation to do this from $1m is not unreasonable


You seem to be suggesting you put some thought into the balance you hold between NZ, ASX, and Foreign and are willing to vary this, I have done the same
and have been happy with results. Over tha last 10 years NZX has dropped by half, ASX and Foreign increasing.

We make our own decisions without broker advice, indeed when we listened to a broker many years ago he proved to be less effective than ourselves.
You company choices are quite similar to our own.

It is a moot point the holding of small companies, good ones grow faster, but we have only been willing to put small amounts into them compared to the entire portfolio, so the effect on the portfolio has been small. Nevertheless I can recall several 10 baggers and more which have useful contributions.

We now own no Foreign shares directly using Lic's totally, eg RIT, PCT and WWHS which incidentally has been our greatest growth investment this year.
Recently we have purchased Lic's on ASX and reduced direct holdings to make life easier. eg: GMI,AFX,MIR

Good luck with your ideas, I believe you are on a path which has more than a good chance to succeed notwithstanding GFC's.

[ENP]

i believe the market is usually efficient and do not have the knowledge to analyse balance sheets.

It's not overly complicated to know the basics.

I learnt all I need to know on how to read a balance sheet from 5th form accounting at school and the following two books.

The New Buffettology
Warren Buffett and the Interpretation of Financial Statements

It only takes 1-2 weeks to learn. I'd rather invest 2 weeks of my time than let a "broker" tell me what to do with my million dollars.

[Lizard]

So, as I read that, you want a strategy that stands a good chance of delivering an 8.4% net return per annum or equivalent to about 12.0% if it was all in the form of taxable income at an average 30% tax rate. Probably realistic to look at a portfolio that produces about 5% gross from interest/dividends and 5% capital gain (presumed untaxed).

I have had management of a portfolio that was structured to achieve this exact return since 2002. The initial split requested by the 70 yr old investor was, 15% cash/term deposits, 20% debentures, 10% mortgages, 15% property trusts, 15% other NZ shares, 15% Australian shares and 10% overseas shares. The "mortgages" part pretty quickly morphed into bonds and grew to 15%, while debentures were eventually mostly replaced with term deposits (though still took a few hits). The portfolio gets rebalanced on a 3 month cycle. The individual categories are split into 6-9 individual holdings.

Over the 8 years, the fund has ended up about $9k short of the capital gain target and about $70k up on the income target. This is despite some heavy losses in individual investments on some occasions - a few failed debentures and one 100% loss on a shareholding.

In my view, given the portfolio strategy survived a market cycle, it seems to have worked quite well for the targeted returns using a fairly low risk approach that hasn't disturbed my sleep. However, having observed the losses in fixed interest, I would say that for myself, I would probably prefer to split between straight out cash/rolling term deposits and in shares - focussing mostly on dividend payers. This is because I feel that using a rebalancing approach, it is possible to bounce back from most sharemarket meltdowns, whereas it is rather hard to make large capital gains on bonds. I also have a reasonable amount of confidence in my stock-picking abilities after this many years.

I would also probably prefer to work with fewer holdings just to minimise the paper shuffling.

If you don't feel you have too many clues about picking shares, then there needs to be a minimum basic strategy - e.g. use a subscription or broker service for buy/sell recommendations, maybe use some basic freebie charting when reviewing. A rebalancing strategy between individual stocks can work okay, but I'd only suggest using it if you've first acquired some basic education about how to spot stocks that are at risk of going bust (or requiring substantial new capital in the current market). In general, I operate so that I reduce or sell holdings if they are twice the size of the intended average holding and either sell or add to stocks that are less than half the intended average value.

I'm expecting this post to be followed by a torrent of posts explaining how you could make much, much better returns using other strategies. They may well be correct. However, I just thought it might be of interest to demonstrate a fairly mechanical, low risk strategy that has achieved the returns you're looking for.

[percy]

voltage.
I can not add any better advice than Oldrider,ENP,or Lizard. Why retire at 62 ? With good income you may live until you are 95.With income saved by stay in in the work force until you are 65 or older will certainly give your portfolio 3 or more years of extra compond growth.
You are well on the way,and as others have advised it is more a matter of learning and trusting yourself.You have done well to be in the position you are in,so you must take the credit for that yourself.Steady as it goes,and grows.

[RRR]

Good article from Diana Clement about overseas investing http://www.nzherald.co.nz/personal-f...ectid=10738730
Diana reads sharetrader!